Smithfield Foods Execs' Pay Increases

July 14, 2001|By PETER DUJARDIN Daily Press

SMITHFIELD — Joseph W. Luter III, Smithfield Foods' chairman and chief executive officer, got paid $8.6 million for the company's most recent fiscal year -- a 134 percent increase over the previous year -- as the company's stock gained strength, even as many other leading companies' stock faltered.

Luter, 62, got paid a salary of $850,000; a bonus of $7.3 million; and other compensation of $464,000 through a life insurance policy, according to documents that the company filed with the U.S. Securities and Exchange Commission.

"The committee considered the company's strong financial performance and growth over this period and Mr. Luter's individual contributions in guiding and managing the company's growing operations," the company's compensation committee said in the SEC report.

Aside from his annual compensation for the fiscal year that ended on April 29, Luter earned 300,000 stock options that he will be able to exercise in 2010. If the company's stock grows 5 percent a year over the next decade, the options would be worth $5 million. If the stock grows 10 percent annually, they would be worth $12.6 million.

Smithfield Foods -- which raises pigs; slaughters them; and turns them into hot dogs, bacon, fresh pork and other products -- is the world's largest pork company.

During the past year, the company's stock has grown 55 percent, even as the Standard & Poor's 500 Index -- a leading gauge of large-company stock prices -- fell nearly 19 percent in the same period.

Over the past several years under Luter's direction, the company has grown vastly through buying other companies and strengthening its existing lines of business. The company used to be mostly a hog processor -- buying the hogs from others. But it's now the owner of hog farms and raises its own pigs. Some analysts say that move makes the company stronger.

The company has recently taken steps to increase its presence in the "case-ready" meats area. That's where it sells prepackaged fresh meat to companies like Wal-Mart, rather than sending larger meat parts to the grocers for them to cut up on their own.

Other executives at the company also shared in the increase.

Lewis R. Little, the president of the company's Lykes Meat Group and Smithfield Packing Group, was awarded a salary and bonus of $1.7 million, up 20 percent.